AUD/USD Forex Technical Analysis – Downside Momentum Targets .7571 July Bottom

The AUD/USD fell sharply on Thursday in reaction to a key decision by the European Central Bank. The ECB announced it would extend its bond purchases, reducing the chances that it would hike interest rates in 2018.

ECB president Mario Draghi said “an ample degree of monetary stimulus remains necessary”, as inflation has yet to show signs of a sustained upward trend.

Also helping to boost the U.S. Dollar against most major currencies was the U.S. House of Representatives decision on Thursday to clear a procedural path forward for a Republican tax bill.

AUD/USD investors are now waiting for President Trump to make his U.S. Federal Reserve chair decision. This is the next major event that could move the U.S. Dollar.

Daily Technical Analysis

The main trend is down according to the daily swing chart. The AUD/USD is in a freefall which means it has more than enough downside momentum to test the July 5 bottom at .7571 over the near-term.

Because of the prolonged move down in terms of price and time, the market is in the window of time for a closing price reversal bottom. Therefore don’t be surprised if we start to see some profit-taking or some aggressive counter-trend buying as the AUD/USD approaches the July main bottom.

Daily Forecast

If the downside momentum continues then look for the rally to extend into .7571.

If there is a reversal today then the intraday upside target becomes the downtrending angle at .7697. This Gann angle, moving down 0.002 per day from the .7897 top, comes in at .7697 today. We’re likely to see renewed selling on a test of this angle, but if it fails then look for the short-covering rally to intensify.